North Africa suffers economic fallout from the Iran war via fertilizer and energy disruptions, fueling inflation and fiscal strain. Morocco, Egypt, Tunisia face heightened risks of social unrest. Resilience requires governance reforms, diversified partnerships, and deeper regional cooperation to buffer future shocks.
North African states feel the consequences of the US-Israel war with Iran less through direct security risks than through economic shocks that affect long-term stability. The region remains highly exposed to disruptions in global food and energy markets, where price spikes can lead to fiscal pressure, inflation, and social unrest.
These spillovers operate through two main channels: fertilizer market disruptions that influence food production costs, and rising energy prices that increase import bills and inflationary pressures. Together, these dynamics highlight two broader challenges for the region. The first is the need to strengthen economic resilience by improving governance of critical sectors such as agriculture, food systems, and energy markets. The second is the need to continue diversifying economic and diplomatic partnerships while deepening regional cooperation, allowing North African states to better buffer themselves against an increasingly unpredictable world order.
Fertilizer disruptions and food security
Food security risks arise primarily from disruptions to fertilizer supply, shipping routes, and energy costs. The Strait of Hormuz is a critical chokepoint for international energy and fertilizer markets. Around one-third of the global fertilizer trade passes through the Strait, including from producers that supply a large share of the word’s urea and sulfur, necessary components to produce fertilizer.
Even short-term disruptions in Gulf export routes can drive up global fertilizer prices through futures markets, raising input costs for import-dependent regions like North Africa. If disruptions persist, they could affect the availability of fertilizer over the medium term, with knock-on effects on crop yields toward the end of 2026 and into early 2027.
Morocco experiences the impact of these disruptions on both the import and export fronts. A major producer of phosphate fertilizer and phosphoric acid, in 2023 the state-owned fertilizer giant OCP Group imported 6.5 million tons of sulfur, and analysts expect that figure will rise as fertilizer production capacity increases. Morocco sources sulfur from Kazakhstan via the Caspian-Black Sea routes, which the disruptions have not affected, and from the United Arab Emirates and Saudi Arabia via the Strait of Hormuz. In 2024, Morocco signed a 10-year deal with Qatar to supply 7.5 million tons of sulfur to OCP Group. While a Hormuz closure would not affect all of Morocco’s sulfur deliveries, it could potentially disrupt a significant share of supply and trigger price spikes and feedstock shortages. This would likely mean a corresponding reduction in export volumes to its main markets in India, Latin America, and sub-Saharan Africa, feeding back into pressure on global food prices.
Egypt faces pressures on both its fertilizer and grain import routes. The country has a large fertilizer industry that relies on key imported raw materials and is also a major exporter, having shipped about $2.58 billion in fertilizer in 2023 and about $1.4 billion in urea in 2024. In addition, Egypt uses fertilizer domestically at one of the highest rates globally, reflecting the density of its agricultural system. Disruptions in the Eastern Mediterranean have already squeezed Egypt’s urea production, pushing up costs for Egyptian farmers at a difficult time during the agricultural cycle. The country depends on imports of sulfur to produce processed phosphate fertilizer. Delays or cost increases could tighten availability. In the long term, this could impact the country’s planned expansion of fertilizer production, including projects linked to Misr Phosphate dependent on reliable imports of sulfur and sulfuric acid.
On grain imports, Egypt’s exposure is different in nature from the disruptions it faced during the Russian invasion of Ukraine in 2022. This time, its grain import routes through the Caspian and Black seas have not been affected. And so far the Houthis have not gotten involved in the US-Israel-Iran conflict. Unless they resume attacking vessels on the Red Sea, Egypt’s grain import supply is likely to remain stable. But as one of the world’s top wheat importers by value and consumption, Egypt remains structurally exposed to second-order effects like rising shipping insurance costs, market pricing volatility, and the currency pressures that make dollar-dominated energy imports — especially oil products and gas — more expensive. Egypt faces the risk of further reductions in Suez Canal revenue if global shipping disruptions intensify and more traffic reroutes through the Cape of Good Hope. The canal had already suffered major loss of foreign-exchange earnings because of Red Sea disruptions before the Iran war. A prolonged Hormuz crisis could add to that pressure.
Currency pressures compound these vulnerabilities; they increase costs for North African economies that rely heavily on imports. These pressures are particularly acute in Egypt, where multiple sources of hard currency inflows — especially Suez revenues and exports — are under strain while external financing needs remain high. This combination weakens the Egyptian pound against the dollar, making food and fuel import bills even more expensive in local currency terms. Since the start of the Iran war the pound has come under renewed pressure against the US dollar, further raising fuel costs that are then passed on to the food production chain.
Energy markets
The broader energy picture for North Africa is more varied, but the net result is negative. For energy importers Egypt, Tunisia, and Morocco, higher oil prices have a clear cost. Historically an oil and gas producer, Egypt became a net importer of both gas and oil in the early 2010s, as reserves dried up and domestic consumption increased. Higher oil prices mean higher irrigation, transport, and distribution costs. They also translate into higher import bills, pressure on foreign currency reserves, and depreciation, and at times require subsidy programs that are fiscally difficult to sustain and politically tough to undo. A week into the war, Egypt increased fuel prices by about 17%. The conflict intensified this pressure at a moment when several North African governments are still dealing with the impact of growing debt from previous global geopolitical crises. Tunisia is a prime example of this. Already struggling with long-term economic crisis and high debt levels, it now faces a widening budget deficit due to unanticipated high fuel costs.
Energy exporters Libya and Algeria will benefit from short-term revenue increases from higher oil prices but will also grapple with higher costs and the same structural vulnerabilities in the longer term. In 2025 Libya reached its highest oil production in 12 years — about 1.37 million barrels per day (bpd), translating into around $21-22 billion in yearly revenue. The Iran war may increase those export earnings by raising oil prices. However, political fragmentation and unpredictable production disruptions limit the country’s ability to fully capitalize on favorable market conditions. Libya is also focusing on its gas potential, driven by strong European demand for non-Russian supply; existing infrastructure connections through the Greenstream pipeline to Italy, which provides 8 billion cubic meters (bcm) of capacity; and recent discoveries that point to greater supply, including finds of over 1 trillion cubic feet of new gas reserves in 2026.
Algeria’s oil production is around 1 million bpd with only limited room for short-term increases given aging fields, infrastructure constraints, domestic demand, and OPEC+ commitments. The country therefore benefits from higher oil prices but not from higher volumes. Over the past 10 years, gas has been the main focus of Algeria’s energy industry, with pipelines connecting to Europe through the TransMed (roughly 33 bcm per year) and Medgaz (10 to 12 bcm annually) lines.
Implications
North African history is in part one of food and energy price shocks translating into political instability. The pattern is long and consistent. Egypt’s 1977 bread riots killed dozens and forced the government to reverse needed subsidy cuts. Tunisia and Morocco followed in 1984 and Algeria in 1988, each time in response to the government’s efforts to remove subsidies under fiscal pressure. These measures triggered violent popular backlash. In 2007-08, food prices doubled across the region, again sparking a fresh wave of protests that foreshadowed the 2011 uprisings. The lesson from that sequence is particularly relevant now: When fiscal buffers are depleted, price shocks have an immediate destabilizing effect. That impact could be more acute as North Africa is still struggling with the lingering economic aftermath of the global COVID-19 pandemic and of the two most recent major geopolitical disruptions, the Russian invasion of Ukraine and the war in Gaza. North African governments operate under various degrees of austerity constraints, compounded by the global pandemic, and have limited capacity to deal with the aftermath of additional geopolitical crises. Households, with even less ability to manage price increases than governments, are often the real losers.
What the war exposes is North Africa’s structural vulnerability to global commodity shocks. The region relies heavily on imports of food and energy from markets it does not have the means to influence and earns foreign currency through channels that are themselves sensitive to geopolitical disruptions, including tourism, remittances, and canal revenue. The long-term response needs to focus on diversifying partnerships, strengthening governance of critical sectors, and deepening regional cooperation. Policymakers understand the importance of these solutions. But they require time, fiscal space, and political stability that the current moment does not afford. Each successive crisis since 2020 has narrowed that window. The question for North Africa is how to build greater resilience during increasingly strained times.